Buffett's Berkshire profit triples on stock, bond derivatives

Billionaire investor Warren Buffett’s Berkshire Hathaway Inc said third-quarter profit tripled on gains in derivatives tied to stocks and bonds.

Net income surged to $3.24 billion, or $2,087 a share, from $1.06 billion, or $682, in the same period a year earlier, the Omaha, Nebraska-based company said yesterday in a regulatory filing.

Operating earnings, which exclude some investments and derivative results, were $1,325 a share, beating the $1,267 average estimate of three analysts surveyed by Bloomberg.

Buffett, buoyed by six months of increased profit, targeted Burlington Northern Santa Fe Corp this week for the largest takeover in his four decades as Berkshire’s chairman. The biggest two-quarter rally in the Standard & Poor’s 500 Index since 1975 lifted Berkshire’s stock portfolio, raised the value of derivative bets and boosted investments he made last year in companies including Goldman Sachs Group Inc.

“You’re seeing the kind of gains that are built into the portfolio decisions Warren has made,” said Tom Russo, a partner at Gardner Russo & Gardner, which holds Berkshire shares. The third quarter “is the ultimate recognition in the results of so many of the investments he made in the sharp market downturn.”

The jump in the price of stocks in the portfolio helped increase book value to $126.1 billion, a 10 percent advance since June 30.